69% of Buyers are Wrong About Down Payment Needs

The Belt Team sells lots of homes to first-time homebuyers and invariably when we meet for the first time, there are lots of misconceptions about what it takes to buy a home. How much money you need for a down payment is almost always one of them.

Here’s an article from Keeping Current Matters about some of the mythunderstandings:

69% of Buyers are Wrong About Down Payment Needs | MyKCM

According to a recent survey conducted by Genworth Financial Inc. at the Annual Mortgage Bankers’ Association Secondary Market Conference, mortgage professionals say that first-time buyers still believe a 20% down payment is necessary to buy in today’s market.

Nearly 40% of mortgage industry professionals surveyed believe that a lack of knowledge about the home-buying process is keeping potential buyers on the sidelines. Saving for a down payment is often cited as a huge barrier for first-time homebuyers to make the leap into homeownership.

If homeowners believe that they need a 20% down payment to enter the market, they also believe that they will have to wait years (in some markets) to come up with the necessary funds to buy their dream homes.

The greatest source of confusion cited in the survey results centered around down payments. The results are broken down in the chart below:

69% of Buyers are Wrong About Down Payment Needs | MyKCM

Rohit Gupta, CEO of Genworth Mortgage Insurance had this to say,

“While first-time homebuyers continue to drive the purchase market, we believe many are staying on the sidelines due to the misconception that a 20 percent down payment is required to secure a mortgage.

There are various low down payment options available today that allow prospective homebuyers to reach their dreams of homeownership sooner. It is crucial that, as an industry, we proactively educate eligible borrowers about solutions that will enable them to buy a home when they’re ready.”

Bottom Line

Don’t let a lack of understanding of the home-buying process keep you and your family out of the housing market. Let’s get together to discuss your options! Call The Belt Team at (703) 242-3975.

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Slaying Home Buying Myths

We get questions from first-time homebuyers like this all the time:

  • Do I have to have a perfect credit score?
  • Do I need 20% cash for my down payment?
  • Aren’t interest rates really high?
  • Can I really afford to buy?

Check out what Keeping Current Matters has to say about the myths related to buying a home:

Slaying Home Buying Myths [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Interest rates are still below historic numbers.
  • 88% of property managers raised their rent in the last 12 months!
  • The credit score requirements for mortgage approval continue to fall.

The Belt Team has a Buyer Specialist whose expertise is First-Time Homebuyers. If you’re looking for someone to walk you through each step of the process, call Beth Dadisman at (703) 577-1144. Or click here to schedule a FREE consultation.

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Here’s how you might feel after you buy your first place! We helped these first time homebuyers find their dream home and go to settlement just last week! The Belt Team is ranked in the Top 20 Real Estate Agents in the State of VA (out of 30,000 agents). Don’t you deserve the BEST?!

The Belt Team Specializes in First Time Homebuyers

Taking the Fear out of the Mortgage Process

We get a lot of questions from people thinking about buying a home – whether for the first time or for the first time in a long time. Here’s a great article from Keeping Current Matters that will demystify the process.

You might also want to read our post “Budget Like It’s 1999 and Other Tips for First Time Homebuyers”!

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Taking Fear Out of the Mortgage Process

A considerable number of potential buyers shy away from jumping into the real estate market due to their uncertainty about the buying process. A specific cause for concern tends to be mortgage qualification.

For many, the mortgage process can be scary, but it doesn’t have to be!

In order to qualify in today’s market, you’ll need to have saved for a down payment (the average down payment on all loans was 11% last month, with many buyers putting down 3% or less), a stable income and good credit history.

Throughout the entire home buying process, you will interact with many different professionals, all of which perform necessary roles. These professionals are also valuable resources for you.

Once you’re ready to apply, here are 5 easy steps that Freddie Mac suggests to follow:

  1. Find out your current credit history & score – even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score of all closed loans in September was 731, according to Ellie Mae.
  2. Start gathering all of your documentation – income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
  3. Contact a professional – your real estate agent will be able to recommend a loan officer that can help you develop a spending plan, as well as determine how much home you can afford.
  4. Consult with your lender – he or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.
  5. Talk to your lender about pre-approval – a pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change), and demonstrates to home sellers that you are serious about buying!

Bottom Line

Do your research, reach out to professionals, stick to your budget, and be sure that you are ready to take on the financial responsibilities of becoming a homeowner.

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Email The Belt Team for our list of trusted lenders. They can walk you through the process in great detail and explain each step along the way, estimate monthly payments and tell you how much cash you’ll really need to have.

Contact us to set up a FREE Buyer Consultation. We will show you our “7 Steps To Your Dream Home”!

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